118 STAT. 1571 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(1) IN GENERAL.—This section shall not apply to any indi vidual to whom this section would otherwise apply for any taxable year during the 10 year period referred to in subsection (a) in which such individual is physically present in the United States at any time on more than 30 days in the calendar year ending in such taxable year, and such individual shall be treated for purposes of this title as a citizen or resident of the United States, as the case may be, for such taxable year. ‘‘(2) EXCEPTION.— ‘‘(A) IN GENERAL.—In the case of an individual described in any of the following subparagraphs of this paragraph, a day of physical presence in the United States shall be disregarded if the individual is performing services in the United States on such day for an employer. The preceding sentence shall not apply if— ‘‘(i) such employer is related (within the meaning of section 267 and 707) to such individual, or ‘‘(ii) such employer fails to meet such requirements as the Secretary may prescribe by regulations to pre vent the avoidance of the purposes of this paragraph. Not more than 30 days during any calendar year may be disregarded under this subparagraph. ‘‘(B) INDIVIDUALS WITH TIES TO OTHER COUNTRIES.— An individual is described in this subparagraph if— ‘‘(i) the individual becomes (not later than the close of a reasonable period after loss of United States citi zenship or termination of residency) a citizen or resi dent of the country in which— ‘‘(I) such individual was born, ‘‘(II) if such individual is married, such individ ual’s spouse was born, or ‘‘(III) either of such individual’s parents were born, and ‘‘(ii) the individual becomes fully liable for income tax in such country. ‘‘(C) MINIMAL PRIOR PHYSICAL PRESENCE IN THE UNITED STATES.—An individual is described in this subparagraph if, for each year in the 10 year period ending on the date of loss of United States citizenship or termination of resi dency, the individual was physically present in the United States for 30 days or less. The rule of section 7701(b)(3)(D)(ii) shall apply for purposes of this subpara graph.’’. (d) TRANSFERS SUBJECT TO GIFT TAX.— (1) IN GENERAL.—Subsection (a) of section 2501 (relating to taxable transfers) is amended by striking paragraph (4), by redesignating paragraph (5) as paragraph (4), and by striking paragraph (3) and inserting the following new para graph: ‘‘(3) EXCEPTION.— ‘‘(A) CERTAIN INDIVIDUALS.—Paragraph (2) shall not apply in the case of a donor to whom section 877(b) applies for the taxable year which includes the date of the transfer. ‘‘(B) CREDIT FOR FOREIGN GIFT TAXES.—The tax imposed by this section solely by reason of this paragraph shall be credited with the amount of any gift tax actually Applicability.
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